Malaysian palm oil futures eased on Monday, as market players booked profits from a 13-month high hit earlier in the day, with losses capped by expectations of lower stocks due to a shift in demand to palm oil from soyoil, where supply is tightening. Industry regulator the Malaysian Palm Oil Board will issue the widely watched stocks data for March on Tuesday.
Palm oil jumped almost 5 percent last week on improved demand following a damaging drought in soy-exporting South America and US data showing farmers will plant less soy this season, setting the stage for prices to fall back from an overbought position this week, traders said.
"The market might have gone ahead of itself a little too much. Although some believe that the stocks report will be quite bullish, there's always the flip side of the coin as some hold the view that stocks could stay above 2 million tonnes," said a trader with a foreign commodities brokerage in Malaysia. Benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange closed 0.8 percent lower at 3,575 ringgit ($1,165) per tonne after going as high as 3,623 ringgit, a level not seen since March 8 last year.
Traded volumes stood at 24,548 lots of 25 tonnes each, slightly lower than the usual 25,000 lots. Market players are keeping a close watch on palm oil stocks and exports data for further cues on market movement. A Reuters poll last week showed March palm oil stocks fell to a seven-month low as strong export demand chased weaker production growth.
Traders are hopeful that export demand, which rose in March on the back of tighter soybean supplies, will continue to pick up this month. Exports recorded a less than 5 percent gain in March from a month ago, snapping four straight months of declines. Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will also release Malaysian palm oil exports data for the first 10 days of April on Tuesday.
Brent crude slipped below $123 after Iran agreed to resume talks on its nuclear programme, easing fears of a supply disruption in the Middle East. In other vegetable oil markets, the most active US soyoil contract for May was almost flat while the most active Dalian soyoil September contract rose 0.5 percent.